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It will become easier to buy a house
- bitxbitxbitcoin 8y agoAnd in the meantime, it's pretty easy to buy a van.
- pxeboot 8y agoAs always with real estate, the effects of this will be highly localized. I would expect a much bigger price drop in Florida than San Francisco.
- benj111 8y agoAll the people dying in Florida must be moving in from elsewhere though. San Francisco is getting the benefit earlier, at Florida's expense.
- twodave 8y agoI have lived in FL my whole life and believe me when I say that the tech jobs were the ONLY thing I have ever felt like I was missing. And after having built a career over the last decade or so on this coast and having learned a bit more about who I am and what I really want, I don’t miss the FAANG jobs either. It’s fantastic here, and I’d recommend it to anyone.
- moltar 8y agoWhat are the good and fun areas of Florida? I’ve never been, but always had an impression of it being a large retirement place. Except Miami, ofc, which also didn’t appeal to me. Would love to visit some day, but want to go to the right places. Thank you.
- twodave 8y agoThe entire east coast is pretty interesting. I’ve lived in Jacksonville or near it my whole life. We have moderate weather while still having some semblance of seasons, we have beautiful and uncrowded beaches, people are relaxed for the most part... and it’s a Navy town so you have a lot of diversity in the area. If you work in tech here you end up making more for the CoL than you would in almost any other place on the planet. I’ve been making mid-100s or better for the last 3-4 years (have 12 years of experience now). Housing prices have been rising, but if you’re patient you can still find places in the $100-115/sq ft range. My wife and I are raising our 4 kids here and would never dream of leaving.
- deleted 8y ago[deleted]
- projectramo 8y agoAlt view: as the nation ages, a lot of retirees from cold states will move to Florida driving up prices there. (Before the drop). San Fran I cant comment on because I can only discuss rational markets.
- robertAngst 8y ago>San Fran I cant comment on because I can only discuss rational markets. Doesn't this imply a bad future? Also since San Fran is cold, I can see it losing its geographic appeal.
- ethbro 8y agoJust wait long enough, it'll warm up. Or slide into the ocean. 50-50.
- jacobolus 8y ago> since San Fran is cold, Cold compared to where? (Maybe your reference is Honolulu and Miami?) What part of SF are you talking about? The lowest low temperatures of the year where I live in SF are among the highest anywhere in the country. We use a heater around this time of year, but it would be reasonably comfortable to go without. It is sunny most of the time, I would say at least 250 days/year. The typical day throughout most of the year is “warm”: the kind of weather for wearing jeans and a long sleeved shirt (so the sleeves can be rolled up or down), but no sweater. It is seldom “hot” (occasionally temperatures in the 90°F range), and average high temperatures in the summer are cooler than most of the continental US. We don’t use AC at all.
- monocasa 8y agoIt's the humidity that kills you in San Fran. I'd take 20F in Colorado over 50F in San Fran anyday.
- jacobolus 8y agoAre you saying it’s too dry, or too wet? I find the humidity in SF to be quite moderate throughout the year. I grew up in Southern CA, which is drier, and I have relatively oily skin. Again, which part of SF are you talking about?
- benatkin 8y agoThe population has been growing at a much faster rate in Florida than the average for the United States, so prices probably won't go down very much in attractive places there, either.
- benj111 8y agoI would like to see a version of that table for 20 years prior. I would expect the old to have greater property wealth than the young, they've had longer to accumulate it. So without a comparator it seems pretty meaningless to me. And regarding the closing conclusion. I really don't understand why many people are so against inheritance tax. Assuming it needs to be paid at some point, what better time than when you're dead?
- true_religion 8y agoWell some people are against inheritance tax because they stand to inherit or they want their children to inherit them. It's basically self interest at work. Now they are against the tax for even the very rich because they desire fairness or they are afraid of a slippery slope decision.
- trophycase 8y agoOr because it was already taxed identically to other assets but for some reason people are mad that it wasn't spent fast enough.
- benj111 8y agoWhat's the situation re inheritance tax for property wealth v other wealth in your country? From what I'm aware property is generally treated the same as, or more leniently than other assets. Your comment seems to be saying the opposite? Or am I misinterpreting?
- njarboe 8y ago100 shares of BRK-A in 1980 would have been about $30,000 for your parents to buy. They paid tax on the $30k. You inherit those today and they are worth about $30 million. If you make the argument that one should not pay tax on this inheritance, fine. But don't pretend tax was already paid on the $30 million. How about at least a capital gains tax before a tax fee transfer?
- 8y ago
- swampthinker 8y agoShould be noted that this is about UK housing, but I assume the US is similar.
- nowarninglabel 8y agoThey sort of weaken their own premise, first saying that: "In the past two decades house prices have doubled in real terms" Then saying: "Most empirical work shows that a 1% rise in the housing stock leads to a 2% fall in prices and rents, all else being equal. On that basis, a mass-downsizing would imply a cut in prices of about 5%." When things have doubled in price, getting 5% off isn't really much help, especially when, as they noted, purchase taxes have gone up considerably.
- cheald 8y agoThey've doubled in price, but cost per square foot is broadly stable [1], rates are substantially lower than they were 2 decades ago, and sub-20% down loans are much more common than they once were. A $150k loan in 1999 at 7.6% would cost you $1,059/mo in mortgage payment. A $300k loan at 4% today will cost you $1,432/mo - a 35% increase over the original price, not the 100% you'd expect. Meanwhile, you aren't paying 2x per square foot - you're getting roughly twice as much house as you did before for that price, for only a 35% increase in payment! [1] This is a smallish dataset, but the trend holds outside of the pre-2008 runup. I don't have that data immediately on hand, though. https://www.clevelandfed.org/newsroom-and-events/publications/economic-trends/2012-economic-trends/et-20120119-trends-in-housing-prices-per-square-foot.aspx https://www.clevelandfed.org/newsroom-and-events/publication...
- jacobolus 8y agoZoning / development incentives in many places is such that houses of the size typical decades ago can no longer be built. Having twice a big a house doesn’t help if you can’t afford the 35% price increase.
- TaylorAlexander 8y agoI see. The poster above says value has gone up, but that says nothing of the floor in prices, which is also rising even if at a different rate. The end result can still mean more people priced out of the area and harder times for those in it.
- drcode 8y agoI wouldn't put it past the baby boomers to figure out a way to reach immortality, just so they can prevent this from happening.
- CoolGuySteve 8y agoThey'll just vote to remove estate taxes so that their children and children's children will inherit their homes without the place ever touching anything close to the market. It's cool and internationally minded, like the seigneurial system in early French Canada but now.
- jstarfish 8y agoWhat? That goes against all Boomer logic. They'd vote to reclassify their house as a crypt to permanently take it off the market, die surrounded by their possessions and ensure their children and children's children inherit nothing.
- jf- 8y agoI think it's more likely they'll be re-mortgaged while still occupied via 'equity release', or sold outright to pay for elder care. Either way, I'd expect relatively little to end up being passed on via inheritance.
- muhneesh 8y agoIt would be useful for the HN title to qualify that this isn't about the U.S. With the new tax changes + increases in the interest rate, the downsizing phenomenon will not make as much sense in the U.S. given incentives to hold onto the property and the inability to buy a proportionately valuable downsized house.
- ethbro 8y agoThe decrease in interest premiums (on max 1M -> 750k principle) and state property taxes (10k cap) would seem to be a net negative for people sitting in expensive homes, which seems like it would prod to some sales and downsizing around NYC and SF.
- muhneesh 8y agoMy point on the tax incentives were that current homeowners are grandfathered into their mortgages (assuming they bought before Dec. 2017). Regarding state property taxes, I think they are treated as a local tax - so it wouldn't affect NY or SF given that their state income tax is likely to be higher. Your point is true in other geos though.
- jayflux 8y agoNot to start of a debate. But wouldn’t most millennials have bought a house by now? Going off Wikipedia definition would this article not be for Generation Z? Most millennials would now be mid 30’s. Some people I know at that age already have a mortgage.
- PhoenixReborn 8y agoReally depends on your definition of millennial. If we take the [Wikipedia definition](https://en.wikipedia.org/wiki/Millennials#Date_and_age_range_definitions https://en.wikipedia.org/wiki/Millennials#Date_and_age_range...) then the youngest millennials would be anywhere from 22 to 25. The older end of millennials would be mid-30s as you say, but anecdotally at least I know relatively few who own a house.
- selectodude 8y agoThe youngest millennials are probably still 10 years removed from being able to even afford a house.
- deleted 8y ago[deleted]
- rndmize 8y agoThe oldest millennials are in their mid 30s, with the youngest being early/mid 20s depending on your definition. Further, I know plenty of early 30s millenials that continue to rent instead of buy for a variety of reasons.
- munificent 8y agoThey would if they could, but many can't afford to because of the aforementioned housing prices, so are continuing to rent.
- lazyasciiart 8y agoNo, the article is about millennials, who in past generations would have bought a house by now, but in this generation generally have not. As they say, a 27 year old today is half as likely to own a house as they used to be. This page has a chart showing how home ownership has decreased for under 35s. https://www.resolutionfoundation.org/data/housing/ https://www.resolutionfoundation.org/data/housing/
- 40acres 8y agoI won't lie, I've been following the recent volatility in the market and economic slowdown with the intent to take full advantage of it with the end result of buying my first house. I graduated in 2013 and have lived in high (Boston) and growing (Portland, OR) CoL areas, my next move will likely be either Seattle or the Bay Area. Despite healthy savings for a down payment in a "normal" CoL area when calculating a 15-20% downpayment for homes that interest me and my partner it seems like we are on a treadmill, hustling harder and going nowhere. Rising interest rates are a concern when shopping for a mortgage, but we'll be ready to transition our funds from the market to a HYSA when the time is right. I lost ~5% percent last year but don't have any intention of drastically changing my asset allocation unless something big happens in the next 6 months.
- lotsofpulp 8y agoIf you need some amount of money sometime within the next ~5 years, then parking it in a FDIC insured savings account is the most appropriate option commensurate with the amount of risk tolerable (i.e. none), in my opinion.
- ethbro 8y agoWhy not invest in <5 year US Treasuries? Approximately same security, higher yield than savings accounts. (Asuming you're not going through the gymnastics / risk to balance across reward savings accounts)
- lotsofpulp 8y agoYou can, just more work. If you're saving for a smaller downpayment, it might not be worth the effort for 50 basis points.
- charlesdm 8y agoNothing you can't do in an afternoon of work if you're holding them until maturity.
- 8y ago
- larrywright 8y agoIt's actually not hard to buy one now* * assuming you don't want to live in CA, Seattle, Portland, or other similarly expensive areas.
- deleted 8y ago[deleted]
- twodave 8y agoYes have fun working your FAANG job, paying a giant chunk of your gross earnings to the state, and then sitting in traffic driving past homeless people IN THE SMOG for hours on the way to your tiny house each evening. Is it worth it? To me, unless my family was from the area I would never entertain going to such a place.
- larrywright 8y agoNot sure why you got downvoted (tone, perhaps) but I absolutely agree with you. I work for a large company, from home, in a medium-ish town in the midwest. I have no commute, but even when I worked for a different company in an actual office here in town, I only had a 15 minute commute one way. There’s no way I’d be willing to have a long commute by train or car just so I could live in a large city.
- twodave 8y agoYeah I figured my sarcasm might penalize me, but it’s how I really feel haha
- gnulinux 8y agoI absolutely agree with you. Imho there is no reason to live in a non-large city.
- megaman8 8y agoYou're right. Here in the exurbs where there's 6 lane highways and one way is completely clogged, I can see miles and miles of empty space where housing could've been built, had the zoning commission any common sense at all. It's just, employee's choices are very limited and you don't get to choose which companies are highering. Employees can say they want to leave the bay area/high COL areas all they want, doesn't mean employers have to do it.
- madengr 8y agoI thought millennials wanted hip lofts in revitalized urban areas? They do, until they have kids, then it’s flee to the suburbs with the decent schools. At least that is the observation with my coworkers. I’m a cynical gen-x (still with elementary school kids) who bought a suburban house before marriage. Of course it’s now almost paid off.
- qwerty456127 8y agoIs it so hard to start a decent school in whatever an area when there is demand?
- lotsofpulp 8y ago"Decent" school means full of kids who come from stable homes with parents who have stable, median+ incomes. Private schools in cities can accomplish this by charging $20k+ per year in tuition, and people who can't afford private schools can opt to live in suburban school districts where there are mostly homes therefore it's auto-selected mostly for kids whose parents are able to own homes.
- qwerty456127 8y ago> Private schools in cities can accomplish this by charging $20k+ per year in tuition Why? What are the actual expenses that make it cost more than $1000 per month per a child?
- lotsofpulp 8y agoIt’s to keep out the kids whose parents can’t afford the tuition. $20k/year/student is on the cheap end in the richer areas too.
- qwerty456127 8y agoI believe $500/month would be enough. My parents had never been earning more than this for example (but this was not in the US).
- throwaway23884 8y agoThe article is wrong because it doesn't account for your parents supporting measures to import third-world immigrants who pack 3 families in one house. That way, your parents can sell their house for 2x as much (supply vs. demand), and they can spend their last couple of years of life blitzed out of their minds on margaritas, while you pay more in taxes to support social services for the immigrants. Enjoy!
- klyrs 8y agoDevelopers are a big problem in large cities. They buy up properties in bulk, build larger townhouses and condos; and turn a huge profit by charging higher prices for less land. The phenomenon of immigrant families packing into houses is significantly less impactful than developers packing dozens of families into land that previously held a few smaller dwellings. Stop the focus on poor immigrants -- they aren't stealing your money and land. That's what rich developers do, and much more effectively than immigrants could ever muster
- notahacker 8y agoI think this is a case of don't feed the troll. It's well established that the only British age group whose hostility to immigration approaches that of the troll's is the 65+ cohort he claims are "supporting measures to import" immigrants.
- kspaans 8y agoAbsolutely false. Land costs, permitting costs, zoning, permitting, etc all add up to the final cost of built housing. Developers build what's profitable, that's true, but they aren't twirling their moustaches and charging 3x premiums.
- jf- 8y agoA full 76% of housing wealth owned by those aged 50+. I knew there was a generational economic conflict of sorts, but I never imagined it was this bad. These are our landlords. Making the older generation a class of rentiers who maintain their standard of living off the backs of the young. Want to buy? Too bad. How about you pay rent at the equivalent rate of a mortgage instead?
- esotericn 8y agoSeems perfectly reasonable to me. Below that, you have 20-50 year olds. Above that, you have 50-80 year olds. Let's pretend 80+ doesn't exist for the sake of argument. Perfect random distribution would be 50%. But it's not random. A 50 year old obviously has more wealth than a 20 year old (unless the 20 year old's parents die early and they inherit a wad; which is unlikely given that most don't inherit much, and their parents don't die when they're young).
- jf- 8y agoReasonable is not the term I would use. I've read elsewhere that the rate of home ownership in the UK for 30-somethings is half that of 15 years ago, which is half that again of 30 years ago. Extrapolate that to this distribution and it must have been vastly different for previous generations. Housing has become increasingly unaffordable and those that got in early reap the rewards. I actually looked for figures like those given by the economist on a whim previously, but couldn't find any readily available data. It's nice to see them now. Too bad there's no comparison to what that distribution would have looked like in the past. I can't find exactly the article I'm thinking of above, but these two have a similar gist: https://www.theguardian.com/society/2016/dec/27/home-ownership-figures-are-exaggerated-says-thinktank-resolution-foundation https://www.theguardian.com/society/2016/dec/27/home-ownersh... https://www.theguardian.com/money/2015/nov/17/generation-rent-young-adults-housing-ladder-2025 https://www.theguardian.com/money/2015/nov/17/generation-ren...
- qwerty456127 8y ago> Making the older generation a class of rentiers who maintain their standard of living off the backs of the young. Isn't this the natural way of things? People work and raise children ("living off their backs"), become too old for modern jobs and start living off the backs of the young. Hasn't it always worked this way?
- TomK32 8y ago*inhert That's the only dead-sure way our for our generation (in Europe) to get into the same financial situation our parents have been in.
- dawhizkid 8y agoBuying a home isn't universally difficult across the entire country. It's more that many millennials choose to start their careers in expensive metros like NY, SF, and LA because that is where the jobs are but where a median salary won't be enough for you to save the ~$200k cash to buy the median home in those areas in a reasonable amount of time. There are a lot of programs that allow you to put less than the traditional 20% down for a home (I believe I read a stat that only 55% or so of homes are bought with 20%+ down payment), but again the issue is that a seller is going to view you as less competitive if you offer < 20% and will have a harder time having your offer accepted if there are multiple offers. Anyone who is hitting their late 20s/early 30s and living in SF, for example, knows how many "going away" parties you end up going to of friends who've been here a few years, married/thinking of kids, and planned their escape so they have a chance of buying a home in less expensive metro.
- HumanDrivenDev 8y agoBuying a home isn't universally difficult across the entire country. This article wasn't about housing in the US, it was about housing in the UK. I believe the US is one of the few OECD countries where housing is actually affordable, 3-4 times median income across the whole country IIRC.
- qwerty456127 8y agoIMHO every government should put easily affordable housing among its top priorities together with easily affordable professional education - these are the essentials they should care about.
- lotsofpulp 8y agoThe US government should stop offering subsidized mortgages with Fannie and Ginnie and mortgage interest tax deductions (less of a problem now). All of these contribute to drive up home prices, under the guise of helping people own homes.
- qwerty456127 8y agoSounds reasonable. But there also are other thing to do like developing infrastructure, adjusting zoning and developing public transport so all the jobs won't tend to concentrate in big city centers and there would be more land suitable for housing.
- lifeisstillgood 8y agoAt what point is genuine mass market remote working likely to happen? In the software world (not a great mass proxy) it is still a rarity, but it's there and growing. That (and frankly only that) is the real threat to one way house price bets - at least imo - other views gratefully accepted
- whttheuuu 8y agoprobably never, tbh. It isn't even that prevalent in the software industry which arguably is one the industry that it works best for.
- lifeisstillgood 8y agobut...if you do it means you are managing the real output - surely something that gives you an advantage... unless management is not about getting the best results from each employee oh ... developer hegemony ...
- monocasa 8y agoWhy wouldn't they convert the houses to rental properties and keep the passive income while downsizing?
- louthy 8y agoThey very much do, the UK is becoming a nation of renters where we were previously a nation of home owners.
- twodave 8y agoIf you’re going to be a landlord, better to own property well suited to that purpose. At least in my area it’s a lot more efficient to own many low-cost properties than a few middle-cost ones.
- monocasa 8y agoWhat they've been doing around me is remodeling to turn a middle-cost property into several low-cost apartment properties. Take out the inside stairs, add a kitchen to the basement, etc.
- thescriptkiddie 8y agoIn many places zoning laws make that illegal.
- monocasa 8y agoA lot of those laws have been struck down. http://www.farrellfritz.com/can-zoning-stop-property-owners-renting/ http://www.farrellfritz.com/can-zoning-stop-property-owners-...
- lanerobertlane 8y agoI think part of an overlooked view is many millennial aren't interested in owning a property and more than happy to rent for life. I know that in some countries renting is the default mindset and it seems like within the UK priorities are shifting among that age bracket. I'd assume that's partly due to them not seeing property ownership as a realistic goal thanks to the price of them. As a Guardian opinion piece [0] points out: "Abandoning the hope of home ownership represents freedom for many millennials: it frees up cash that would otherwise go towards buying an asset into living in the present. That can mean renting a more comfortable room (or flat) in a nicer area, it can mean the difference between having enough money to go out or not, and it can even mean hiring a cleaner to make the overpriced rented flat a good deal nicer. Home ownership is almost universally seen as a life goal, or a milestone of success. It needn’t be – not owning a home can be a real benefit for many younger adults. It gives us the freedom to move with work, and try to build savings for other purposes – insurance against getting laid off, for travel, or even for a 'fuck-off fund'." [0] https://www.theguardian.com/commentisfree/2018/jun/20/millennial-house-home-ownership-renting https://www.theguardian.com/commentisfree/2018/jun/20/millen...
- yholio 8y agoIn short, abandoning the most important engine of wealth creation and savings in exchange for consumption that many of them will not be able to sustain in the elder years. Don't get me wrong, surely you can save and rent, but it takes much more discipline and it's not a choice I would say is appropriate for all young people.
- PebblesHD 8y agoGotta be honest, even with a number of articles in our local news discussing prices starting to drop off, I don’t think it will be enough to rescue my generation from near permanent renting. The median prices where I live (Sydney, Aus) are still hovering above a million dollars for a pretty average house over an hours commute from the city and that’s not something I could comfortably take on, especially knowing that unlike my parents I’d essentially be in debt for the rest of my life. If it’s a choice between that and renting while building some modest savings I’ll take that, even if it means the final destination is moving overseas to afford to buy and have some form of post work life.
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- nickgrosvenor 8y agoWhen homeowners decide they can receive more today than next year for their house. A chain reaction of selling will take place as homeowners all rush to the exits at once. Prices will dip based on more supply which will start a price supressing feedback loop for a bunch of people hitting retirement age. Simple as that.